It Pays to Be Happy

Earning more money tends to make people happier, at least up to a point. But new research suggests the reverse may also be true: happier people actually make more money.

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In a study of more than 10,000 Americans, those who experienced more positive daily emotions and felt more satisfied with their lives while growing up earned more income by age 29, according to research from University College London and London School of Economics professor Jan-Emmanuel De Neve and University of Warwick economics professor Andrew Oswald. The paper, published last month in the Proceedings of the National Academy of Sciences of the United States of America, will be presented Friday at the American Economics Association’s annual meeting.

The researchers drew on data from the National Longitudinal Study of Adolescent Health between 1994 and 2008 that asked students whether statements like “You enjoyed life” had been true during the last week. Later, when students were older, they also answered the question “How satisfied are you with your life as a whole?”

Students who described themselves as happier at age 16 and 18 and felt more satisfied with their lives at age 22 earned more income at age 29. On a scale of one to five, a one-point increase in life satisfaction at age 22 translated into around $2,000 more in later earnings. The mean income was around $35,000. Among siblings, a one-point increase in life satisfaction at age 22, compared to the mean of the family, translated into a nearly $4,000 difference in earnings at age 29, compared to the family mean.

The analysis suggests happiness isn’t just linked to higher income — it’s helping generate it. That could be because happier young adults are more likely to earn a college degree, get hired and promoted, be more optimistic and less neurotic, the researchers posit. In their analysis they controlled for other factors, such as education and self-esteem.

Being really happy helps some: those reporting a “very happy” adolescence earned an income about 10% above the average. But being unhappy hurts far more — those who experienced a “profoundly unhappy” adolescence made about 30% less than the average income, the paper found.

Still, a connection between personal happiness and greater income could be good news for countries struggling to boost economic growth, the authors suggest.

“For policymakers, the existence of these mechanisms raises the possibility that a happier society may be one that intrinsically generates higher incomes for its citizens,” the paper notes.

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